Samsung seeks direct answer to supply chain

Samsung is understood to be opening talks with major retailers to ramp up its presence in the high street with an aggressive shop-in-shop strategy and a distribution overhaul which could see it forge direct deals with retailers.

The move sees mobile distributors out of the supply chain, which would deal a blow to the likes of Tech Data Mobile, Micro-P and 20:20 Mobile.

One well-placed industry source said headquarters had sent out retail task teams to every country to assess how much store coverage each region has and how it could be boosted. ‘They want to open Samsung branded shop-in-shop areas in as many stores as possible, showcasing not just mobiles but all their converged products.’

Samsung is understood to want more control over smartphone supply, and is reported by several distribution sources to be in talks with Asda, Shop Direct, Dixons, Argos and Amazon.

A source said: ‘Samsung has been making direct approaches to grocers. It is looking to use the terms that it usually gives to distributors to buy more space within grocers so that it can have that shop-in-shop concept absolutely everywhere.’

Last month the Korean giant announced that it would open 1400 stores experience shops in Best Buy stores in the US.

One source said: ‘This is a real drive, Samsung is trying to own the high street not only at the traditional level but in all the grocer channels they can get their hands on.’

Samsung already has direct distribution deals with Carphone Warehouse, Phones 4u and Tesco, which gives it much greater control on how it markets and controls the supply of its smartphone portfolio. It also supplies its TVs and other converged products directly to electrical retailers.

However, distributors privately question the feasibility of the move. One source said: ‘Distribution is a complex process. This is not an easy thing to do. Samsung could find this is a very expensive operation. Every retailer has very specific requirements.’

Analysts said this week that direct distribution would give Samsung greater control over supply speed, pricing, margins and stocking levels. Neil Mawston, director at Strategy Analytics, said: ‘This strategy suggests that Samsung want to cut out the middle man to help maximise revenue and profit and to control the speed of delivery and to leverage their large sales force with retailers, which are the biggest by some distinction. But retailers will want more choice and I wouldn’t be surprised if they will end up in the middle with a bit more direct sales promotion from Samsung and the distributors still in the mix.’